Module

Financial Markets and Decisions I

Module description

Summary:

This course is the first in a two-part series on the economics of finance. The pair of modules BEE2027 and BEE3034 present the theory of decision-making under risk and the economics of information, discussing applications of the theory in the areas of banking and finance.

This module, FMD I is divided in two parts: the first part deals individual decision making over time and under uncertainty. The second part links individual behaviour to financial markets and equilibrium, including risky assets, micro-foundations of CAPM, and the efficient market hypothesis. The module will also include an introduction to behavioural finance.

Students will be assessed through ELE quizzes and a final exam.  

 

 

Additional Information:

Internationalisation

The module content is globally relevant as it theoretically discusses financial markets, international trends in asset pricing models used by the majority of firms, and comparative studies through up-to-date research.

Employability

Students acquire several skills valued by employers, including a theoretical knowledge and understanding of financial markets, the application of theory, the ability to think like an economist, and designing firm level policies

Full module specification

Module title:Financial Markets and Decisions I
Module code:BEE2027
Module level:2
Academic year:2020/1
Module lecturers:
  • Dr Joerg Weber -
Module credit:15
ECTS value:

7.5

Pre-requisites:

None

Co-requisites:

BEE2025

Duration of module: Duration (weeks) - term 2:

11

Module aims

This course aims to describe the theoretical foundations of the economic frameworks that are used to study important issues in Finance. Financial markets are characterised by risk, time, and uncertainty. The role of risk, time, and uncertainty in the decision-making of various agents participating in financial markets will be studied in detail.

ILO: Module-specific skills

  • 1. apply economic analysis to asset pricing and decision-making under risk and uncertainty

ILO: Discipline-specific skills

  • 2. explain the basic asset pricing equation and decision-making by agents under conditions of risk and uncertainty and the consequences of these decisions in the financial markets.
  • 3. critically analyse the arguments made in support of CAPM and The Efficient Markets Hypothesis.
  • 4. develop an understanding of the concepts of behavioural finance.

ILO: Personal and key skills

  • 5. think analytically about financial markets and firms
  • 6. present technical argument

Learning activities and teaching methods (given in hours of study time)

Scheduled Learning and Teaching ActivitiesGuided independent studyPlacement / study abroad
201300

Details of learning activities and teaching methods

CategoryHours of study timeDescription
Scheduled Learning and Teaching Activities20Lectures
Guided Independent Study130Reading, preparation for classes and assessments

Formative assessment

Form of assessmentSize of the assessment (eg length / duration)ILOs assessedFeedback method
Problem sets for each topic and a revision sheet after all topics are completed.1 hour1-6Written and verbal feedback after students have had the chance of going through the problem sheets on their own.

Summative assessment (% of credit)

CourseworkWritten examsPractical exams
01000

Details of summative assessment

Form of assessment% of creditSize of the assessment (eg length / duration)ILOs assessedFeedback method
ELE Quizzes30set time limit1-6Written or oral feedback
Examination7090 mins1-6Written or oral feedback

Details of re-assessment (where required by referral or deferral)

Original form of assessmentForm of re-assessmentILOs re-assessedTimescale for re-assessment
ELE Quizzes (30%), Examination (70%)Examination (100% 90 mins)1-6August/September Reassessment Period

Syllabus plan

  • Decision making over time
  • Decision making under uncertainty
  • Mean-Variance preferences
  • Consumption-Based Asset Pricing
  • Equity Premium Puzzle
  • CAPM foundations
  • Perfect Markets
  • Efficient Markets Hypothesis
  • Behavioural Finance

Indicative learning resources - Basic reading

Core material

Varian, H. (2014) Intermediate Microeconomics: A Modern Approach (9th Edition), W.W. Norton & Company.

Workouts in Intermediate Microeconomics (9th Edition) by Bergstrom and Varian

Welch, I. (2017) Corporate Finance (4th Edition), Pearson. Open source eBook available on https://book.ivo-welch.info/home

ELE – http://vle.exeter.ac.uk/course/view.php?id=3461

Module has an active ELE page?

Yes

Origin date

19/11/2013

Last revision date

03/08/2020